Gramercy raising $1bn for EM distressed fund – exclusive

The Connecticut investment firm’s target for its Gramercy Distressed Opportunities Fund III is over three times larger than the $305 million raised by the predecessor vehicle.  

Gramercy Funds Management is raising its third emerging market distressed fund, which has a $1 billion target and a $1.2 billion hard cap. The Connecticut investment firm is aiming for a final close in September 2016, and has so far collected $500 million, according to sources familiar with the fundraising. The new fund is much larger than its predecessor, which closed to new money at $305 million in September 2013.

A spokesman for the firm declined to comment.

The fund focuses on investments in Latin America, CEEMEA (Central and Eastern Europe, the Middle East and Africa) and Asia. The firm hasn’t yet declared specific weightings for each region. The top five exposures in the last vehicle were Argentina at 19 percent, Hungary at 8 percent, Mexico and Kazakhstan at 7 percent each, and the Czech Republic at 5 percent, according to Reuters.

The vehicle was registered with the Securities and Exchange Commission in June as a private equity fund, though it will pursue a hybrid private equity/hedge fund structure, according to sources familiar with the firm. It’ll invest in corporate loans, sovereign restructuring situations and do some shorting, a strategy that hedge funds normally employ. The fund is charging a 1.75 percent management fee, with a 17.5 percent carry on a 5 percent hurdle rate.

Earlier this month, the New Hampshire Retirement System committed $50 million to the fund, a re-up with Gramercy, which also had the US pension fund as an investor in its second fund at the same amount.

The firm is headquartered in Greenwich, Connecticut, with additional offices in London, Singapore, Hong Kong and Mexico City. Gramercy is planning to open offices in Buenos Aires and Lima soon as well, according to its website. The firm was founded in 1998 by Robert Koenigsberger, who still serves as in the firm’s managing partner and chief investment officer, to exploit distressed opportunities in the emerging markets.